Why do governments care so much about reducing public debt if they are the sovereign issuer of their currency?
In: Economics
Because you can’t just print money to get out of a debt hole.
Debts spending works if future returns on the spending work out to more than the principal + interest, but this depends on continuous economic growth, which we’re told is not sustainable. Which is true.
If you print money to get out of a debt, people that may otherwise lend you money realize it’s not worth very much, and stop lending you money.
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